i Competition enforcement
The Italian Competition Authority (ICA) enforces both European and national competition rules in Italy. Its enforcement powers encompass restrictive agreements, abuses of dominant position and merger control.2
The ICA’s competition directorate-general is composed of five directorates: (1) energy and basic industry; (2) communications; (3) financial services; (4) foodstuffs and transport; and (5) manufacturing and services. Each of them scrutinises mergers, abuses and restrictive practices relating to their respective business sector.
In 2016,3 the ICA concluded seven proceedings concerning agreements or concerted practices between undertakings: in six of them, the ICA found an infringement of antitrust rules.4 The other case was closed through commitments proposed by the parties, with no finding of infringement.5 Three proceedings concerned abuse of dominance: the ICA found an infringement in one case6 and accepted commitments in the other two.7 The ICA also adopted interim measures at the outset of an investigation in the local transport sector.8 Regarding mergers, in 2016 the ICA reviewed 52 notified transactions; in three cases, clearance was conditional upon remedies offered by the parties after an in-depth review of the transaction.9
ii Other areas of enforcement
The ICA also plays an important antitrust advocacy role. Pursuant to Article 21 of the Italian Competition Act (Law No. 287/90), the ICA reports to the Italian parliament and the government any laws, regulations or general administrative acts that give rise to distortions of competition not justified by general interest considerations. Further, pursuant to Article 21 bis of the Competition Act, the ICA may challenge general administrative acts, regulations and decisions of public administrations in court if they are incompatible with competition law.
Finally, the ICA is empowered to address abuses of economic dependence (Law No. 192/1998), unfair commercial practices (Legislative Decree No. 206/2005) and conflicts of interest of government officials (Law No. 215/2004).
i Significant cases
The ICA fines companies in the vending market for market sharing, customer allocation and price fixing
On 8 June 2016, the ICA issued fines amounting to €103 million against the main competitors in the market for the distribution and management of food and beverage vending machines.10
The infringement lasted from 2007 to 2014 and took the form of market sharing, client allocation and price fixing among competitors. According to the ICA, competitors undertook not to solicit each other’s customers, to overbid or not participate in calls for tenders, and to share the resulting award through joint participation or subcontracting arrangements. In the event a competitor won customers in breach of the collusive agreement, the parties set up a compensation mechanism that could ultimately require the transfer of entire business divisions between cartelists.
The trade association CONFIDA allegedly also played a role in facilitating coordination between its members. In particular, according to the ICA, the association induced competitors to entirely pass on to their customers some newly introduced fiscal levies, thereby avoiding a possible cause for pricing differentiation; the association also reportedly encouraged uniform price upgrades in response to raw material cost increases; and it coordinated the drafting of standard tender rules addressed to customers to minimise price competition.
The ICA rejected the parties’ claim that coordination among them could be justified by product or service quality concerns. The ICA was also unpersuaded that subcontracting was not a disguise for an illicit market sharing arrangement but instead was necessary to serve remote clients’ premises.
Judging by the amount of evidence allegedly collected by the ICA, the case could have been a candidate for a settlement proceeding. However, Italian competition law does not envisage this possibility.
The ICA fines major modelling agencies for price fixing
On 26 October 2016, the ICA fined the main Italian modelling agencies €4.5 million.11 One of the cartelists, IMG Italy Srl, was granted full immunity from fines due to its collaboration with the ICA.
The infringement allegedly lasted from 2007 to 2015 and involved a coordination among modelling agencies on the price components applied for the provision of models’ performances, the transfer of copyrights thereon and other services. According to the ICA, the collusive arrangements were developed through systematic email exchanges and in-person meetings within the framework of the trade association Assem. The agencies also entrusted Assem with the negotiations of commercial terms with their customers, thereby centralising their commercial strategy.
The TAR Lazio and the Council of State call into question the ICA’s legal qualification of allegedly anticompetitive behaviours
In some recent decisions, the administrative courts have proved their willingness to bring under closer scrutiny the ICA’s legal qualification of allegedly anticompetitive behaviours and to overturn its conclusions as to the existence of an infringement.
In one case, the Council of State found that the ICA erred in considering a decision of an association of undertakings as a continued infringement starting from the moment of its adoption. Instead, it qualified this conduct as an instant infringement that did not persist beyond the adoption of the contested decision. This requalification of the infringement’s duration triggered the statute of limitation and, as a result, the ICA fine was annulled.14
In another case, the TAR Lazio held that some exchanges of information between competitors in the sector of video post-production were not anticompetitive – contrary to the ICA’s assessment. The information exchanged was not secret, it only concerned past contracts and therefore it could not have influenced the commercial strategy of the involved undertakings. Moreover, the ICA was not able to prove the existence of an agreement between those competitors in relation to future bidding procedures held by the national TV broadcaster.15
Finally, the TAR Lazio overturned the ICA’s decision against four banks that had submitted a joint bid for the provision of treasury management services to a national social security institute. The ICA found that the banks submitted the joint bid with the sole purpose of preventing each other from autonomously competing for that business. Instead, the TAR Lazio concluded that the joint bid actually reflected a sound commercial strategy and was aimed at competing against other undertakings holding a stronger position in the relevant market.16
ii Trends, developments and strategies
In 2016, some decisions issued by the Italian administrative courts shed light on important procedural issues, such as appeals against the ICA’s decisions, access to the ICA’s files, immunity applications, and protection of defence rights.
The Council of State holds that an undertaking that did not appeal a decision of the ICA cannot benefit from the annulment of the decision following an appeal by other co-cartelists
In 2012, the ICA fined companies allegedly involved in a price fixing cartel in the market for maritime agency services. Hapag-Lloyd, one of the addressees of the ICA’s decision, decided not to appeal it. However, following an appeal by other involved companies, the administrative courts found no proof of the alleged horizontal agreement and quashed the ICA’s decision. Hapag-Lloyd then requested a reimbursement of the fine imposed on it, but the ICA rejected this request because Hapag-Lloyd had not appealed the decision nor had it taken part in the proceedings before the administrative courts.
The matter was referred to the Council of State which, on 29 January 2016, rejected Hapag-Lloyd’s claims.17 The court considered that Article 2909 of the Italian Civil Code – pursuant to which the effects of a judgment are limited to the parties to the proceedings – is applicable to administrative proceedings. The court also held that Article 2909 is not in breach of European principles of effectiveness and equivalence, because the provision is justified by the need to clearly identify the entities affected by a given ruling. Hapag-Lloyd being a leniency applicant was of no consequence: even though it had obtained a leniency discount, Hapag-Lloyd could still have appealed the reduced fine and therefore put itself in the same position as the other co-cartelists.
The Council of State orders the ICA to disclose documents collected in previous investigations to ensure the exercise of defence rights
In 2015, Superbeton SpA was fined by the ICA for its participation in a cartel between concrete producers. When the ICA initiated new cartel proceedings against Superbeton in 2016, the company applied for access to certain confidential documents collected by the ICA during the previous investigation. The ICA denied access, because those documents concerned geographic areas that were not affected by Superbeton’s alleged anticompetitive conduct.
The ICA’s refusal, upheld by the TAR Lazio, was eventually overturned by the Council of State on 28 July 2016.
The Council of State recalled the Menarini judgment, in which the European Court of Human Rights affirmed that antitrust sanctions have a quasi-criminal nature and parties must therefore be granted full rights of defence during antitrust proceedings.18 The Council of State affirmed that the parties in antitrust proceedings must be granted the right to access documents held by public authorities to the extent that this is necessary for the full exercise of their rights of defence, both before the ICA and in appeal proceedings before the administrative courts.
As to the particular case at hand, the Council of State concluded that the limited geographic scope of information contained in the documents requested by Superbeton did not justify a refusal to access those documents. However, the Council of State also emphasised that, when providing Superbeton with the requested documents, the ICA must ensure that no confidential information about third parties is disclosed.
The Council of State requires the ICA to carry out a more careful assessment of facts in proceedings for breach of commitments
In 2008, the ICA started a cartel investigation into passenger sea transport services in the gulf of Naples. The investigation was discontinued in 2009 after the involved undertakings committed to dissolve the consortium CLMP, which was allegedly used to exchange sensitive information among members.
In 2015, the ICA found that the involved companies had breached their commitments and had resumed exchanges of information among them through a new entity, Gescab, supposedly established to replace CLMP. At the same time, the ICA reopened its investigation into the matter and found that seven ferry companies active in the gulf of Naples had been part of a single and continuous market sharing agreement since 1998.
The involved companies brought an appeal before the administrative courts and, on 31 August 2016, the Council of State definitively set aside the ICA’s decision.19
As to the breach of commitments, the Council of State found that, notwithstanding certain similarities between CLMP and Gescab (which had the same management, premises and IT infrastructure), the activities of the former were limited to certain specific commercial initiatives whose legitimacy had been acknowledged by the ICA itself.
As to the existence of a market sharing agreement, the Council of State found that the ICA’s assessment was incomplete and manifestly contradictory. While in the 2009 commitment decision the ICA affirmed that regional regulations significantly impeded effective competition in the relevant market, in the 2015 infringement decision it argued that such regulations had no impact whatsoever on market dynamics. The Council of State concluded that the ICA should have more carefully assessed the effects of applicable regulations and clearly explained the reasons for changing its previous conclusions.
The Council of State confirms the absence of a legal link between immunity applications submitted before different competition authorities
On 20 October 2016, the Council of State confirmed the fine imposed on DHL Express Italy Srl and DHL Global Forwarding SpA (DHL) for their participation in an international freight forwarding cartel in the road transport sector.
In June 2007, DHL submitted to the European Commission an application for immunity from fines concerning several infringements of EU competition law in the sector of international freight forwarding. In September 2007, the Commission granted DHL conditional immunity for the entire international forwarding sector, that is to say, as regards maritime, air and road transit.
In parallel, in July 2007, DHL submitted to several EU and non-EU national competition authorities, including the ICA, summary applications for immunity under their respective national leniency programmes. According to the ICA, the Italian summary application concerned only the international sea and air freight transport sectors, not the road transport sector. However, according to DHL, that summary application concerned illegal conduct observed throughout the international freight forwarding and transport market: while it did not give concrete and specific examples of conduct observed in relation to road freight forwarding, that was merely because such conduct had not yet been discovered. Moreover, in December 2007, DHL brought to the attention of the Commission only – as Explanatory Note 43 of the ECN Model Programme allowed it to do – certain information concerning the conduct of undertakings in the international road freight forwarding sector in Italy.
In June 2008, the Commission decided to pursue only the part of the cartel concerning international air freight forwarding services, leaving the national competition authorities the possibility of pursuing the infringements in relation to the sea and road freight forwarding services.
In 2011 the ICA rejected DHL’s application and instead granted immunity to Shenker Italiana SpA, which had provided information specific to freight forwarding on Italian roads after DHL had received immunity at the EU level and after the Commission had conducted dawn raids in several Member States, including Italy, on the basis of the information it had received from DHL.
DHL challenged the ICA’s decision before the administrative courts on the ground that – having been the first to submit information to the Commission with respect to all freight forwarding sectors – it should have been accorded the first place in the queue for the Italian leniency programme and therefore immunity from fines. According to DHL, the principles of EU law require a national authority that receives a summary leniency application to assess it taking into account the main application for immunity which that company submitted to the Commission. Moreover, DHL submitted that the summary applications submitted by Schenker and Agility to the ICA were inadmissible on the basis of the Italian programme in force at the relevant time, which did not expressly provide for the possibility of the ICA accepting a summary application submitted following a main application to the Commission simply for a fine reduction (as opposed to immunity).
To resolve the dispute, the Council of State requested a preliminary ruling from the European Court of Justice. Based on this ruling, the Council of State concluded: first, that the ECN Model Leniency Programme is not binding on the national competition authorities; secondly, that there is no legal link between the application for immunity that an undertaking submits or is preparing to submit to the Commission and the summary application submitted to a national competition authority in respect of the same cartel, requiring the latter authority to assess the summary application in the light of the application for immunity at the EU level; according to the Council of State, a different conclusion would run against the decentralisation of the European system of competition enforcement established by Regulation (EC) No. 1/2003; and thirdly, the ICA could accept summary applications from undertakings that had submitted to the Commission a mere application for the reduction of fines even before the wording of the ICA leniency programme was amended in 2013 to expressly allow for that possibility.
In light of these judgments, a leniency applicant that, after receiving immunity from the Commission and marker from a national competition authority, subsequently provides evidence to the Commission that indicates that the alleged cartel is significantly different in scope than reported to the national authority (for example, it covers an additional product), should consider updating the national authority in order to keep the scope of its protection at the national level identical to the scope of protection at the EU level.
The TAR Lazio requires full protection of defence rights in proceedings on the breach of previous ICA decisions
In 2014, the ICA fined the Italian bar association for preventing lawyers from advertising their activity online, thereby restricting competition among them. In February 2016, the ICA found that the bar association had not lifted this prohibition and imposed a second fine for failure to comply with the previous decision. The latter decision was quashed by the TAR Lazio on 19 October 2016, because the ICA did not fully respect the bar association’s rights of defence in the course of the proceedings.20
The TAR Lazio’s judgment outlined some important principles to be respected by the ICA when ascertaining compliance with its previous decisions. First, proceedings on the breach of a previous decision can only be initiated when the contested conduct is a clear continuation of the infringement. If that is not the case, a new and autonomous investigation should be opened. Second, the TAR Lazio made clear that proceedings on the breach of a previous decision must comply with the same procedural rules applying to ordinary proceedings. In particular, the involved undertakings must be allowed to defend their case in a hearing before the ICA’s board and a statement of objections must be issued before the adoption of a final decision.
After multiple infringement decisions adopted in the last few years, the concrete industry will continue to be subject to close scrutiny by the ICA, with two distinct investigations currently ongoing in this sector.21
Proceedings involving major insurance groups have also recently been initiated.22
III ANTITRUST: RESTRICTIVE AGREEMENTS AND DOMINANCE
i Significant cases
The ICA fines the Italian football league, its adviser Infront and TV broadcasters Sky and Mediaset for market sharing, but the TAR Lazio overturns its decision
On 19 April 2016, the ICA found that the Italian football league (Lega), its adviser Infront Italy Srl (Infront), and TV broadcasters Sky Italia Srl (Sky), Reti Televisive Italiane SpA and its subsidiary Mediaset Premium SpA (Mediaset) had allegedly entered into an anticompetitive agreement to influence the award of TV broadcasting rights for the top league football matches of the 2015–2018 seasons.23
Lega had tendered out the TV rights in 2014, in five different packages differentiated by category of football match and broadcasting technology. Sky was the highest bidder for packages A and B (i.e., those including rights related to the most prominent football teams in the Italian top league, to be broadcasted via satellite and digital terrestrial television). However, Lega and Infront held that, pursuant to an implicit principle embedded in the tender rules, no single operator could be awarded both packages A and B, and therefore awarded only package A to Sky; package B was instead allocated to Mediaset. As for package D (which included ‘cross-platform’ rights for matches of the remaining football teams), Lega and Infront decided to award it to Mediaset, despite the fact that its bid for such package was conditional and thus, pursuant to a certain interpretation of the tender procedure rules, invalid. Mediaset subsequently sub-licensed package D to Sky, upon authorisation granted by the ICA.
The ICA found the tender procedure flawed for various reasons. Lega ought to have awarded packages A and B to Sky, because it was the highest bidder and no explicit provision of the applicable regulations prohibited the award of both packages to a single operator. Alternatively, Lega could have withdrawn the tender procedure and published a new invitation to tender, in which it could have inserted an explicit provision to that end. Lega should also have launched a new tender procedure for package D, because the only bid received for that package, Mediaset’s, was invalid due to its conditional nature.
The ICA then found that the parties entered into a restrictive agreement aimed at altering the tender outcome, by awarding the packages in a different manner than that dictated by the operators’ bids. The agreement was enacted through a sub-licence agreement on package D from Mediaset to SKY. The ICA concluded that the agreement restricted competition, because it aimed to share a strategic input by altering the outcome of the tender procedure, prevented newcomers from participating in the competitive tender procedure, impaired dynamic competition in the long term by discrediting similar future tenders, and allowed Sky and Mediaset to maintain their market shares.
However, on 23 December 2016, the TAR Lazio upheld the appeals brought by Lega, Infront, Sky and Mediaset and annulled the ICA’s decision.24
First, the TAR Lazio found that the ICA infringed the parties’ rights of defence in deciding on the case almost two years after the contested facts occurred and after having issued favourable opinions on the tender rules and the sub-licence of package D. Second, the TAR Lazio acknowledged that the need to avoid long and expensive legal proceedings could represent a lawful common interest that led the parties to reach the contested agreement. The TAR Lazio also held that the ICA had adopted an incorrect market definition, thereby erroneously considering Eurosport, a content provider, as a potential competitor supposedly affected by the agreement.
In light of the above, the TAR Lazio concluded that the agreement did not restrict competition in the market for TV broadcasting rights.
The ICA closes proceedings against Expedia in the MFN clauses saga without imposing sanctions
On 23 March 2016, the ICA closed proceedings brought against Expedia Inc and Expedia Italy Srl (Expedia) with respect to most-favoured-nation (MFN) clauses contained in agreements entered into with partner hotels; no fine was imposed.25
MFN clauses prevent partner hotels from offering their services online or through other distribution channels at a price lower than the price offered through the Expedia platform. The ICA observed that these clauses could significantly impede competition between guest houses and lead to price increases.
Proceedings were opened in 2014, and also involved Booking.com BV and Booking.com Srl (Booking.com). Booking.com submitted commitments that were accepted by the ICA, acting in consultation with the French and Swedish competition authorities as well as the European Commission.
The investigation continued against Expedia, which repeatedly asked for an extension of the deadline for submitting commitments. Ultimately, Expedia failed to submit commitments before the deadline. Nevertheless, the ICA noted that Expedia had modified its contracts with partner hotels in the same way as Booking.com. The ICA acknowledged that no MFN clause was still in effect and thus there were no longer grounds to proceed against Expedia.
The ICA fines Aspen for charging excessive prices for oncological pharmaceuticals
On 14 October 2016, the ICA fined Aspen Pharma Trading Ltd, Aspen Italia srl, Aspen Pharma Ireland Ltd and Aspen Pharmacare Holdings Ltd (Aspen) more than €5 million for breaching Article 102(a) TFEU.26 According to the ICA, Aspen had abused its dominant position in the Italian market for the oncological drugs Leukeran, Alkeran, Purinethol and Thioguanine (‘Cosmos’ drugs), imposing on the Italian Medicines Agency (AIFA) an increase between 300 and 1,500 per cent of those drugs’ prices.
Applying European case law on excessive pricing, the ICA first considered the disproportion between drugs’ prices and production costs. It then addressed the prices’ unfairness, by noticing that the increase had occurred long after the introduction of the drugs on the market and could no longer be justified by initial investment costs. The ICA concluded that the contested price increase was not justified by R&D costs or other objective reasons.
The ICA also contested Aspen’s aggressive negotiation strategy. In particular, Aspen threatened to withdraw the drugs from the Italian market, as it had already done in Spain. This would have led to negative consequences for both individual patients and the national healthcare system. Also, Aspen caused supplies of oncological drugs to be systematically lower than the demand in order to induce AIFA to accept higher prices for these products.
In February 2017, the Spanish Competition Authority also initiated proceedings against Aspen for allegedly restricting supplies and fixing prices of oncological drugs.27
The ICA closes proceedings against Telecom Italia for infringement of its decision in an abuse of dominance case
In 2013, the ICA fined Telecom Italia SpA, the major national telecommunications company, for rejecting an unjustifiably high number of competitors’ orders relating to requests to activate wholesale services on its network.
In 2015, after the adoption of the infringement decision, the ICA received complaints reporting a still allegedly high number of rejections by Telecom Italia. The complainants argued that Telecom Italia, in violation of the ICA’s decision, had not carried out the structural rearrangement of its internal procedures required to avoid the recurrence of the infringement.
On 21 December 2016, the ICA dismissed all complaints against Telecom Italia. The authority found that Telecom Italia’s provision of access to its network on a non-discriminatory basis had significantly improved since the adoption of the 2013 decision, and the rate of rejections had significantly dropped.
The ICA adopts its first decision on a case of abuse of economic dependence
Article 9 of Law 192/1998 prohibits the abuse of economic dependence. The notion of economic dependence refers to a situation where an undertaking holds significant commercial strength with respect to another particular undertaking, and is therefore different from the notion of dominant position, which refers to an undertaking’s position with respect to the whole relevant market. In 2001, the ICA was empowered to investigate and fine companies abusing the economic dependence of other undertakings.
On 23 November 2016, the ICA adopted its first decision in a case of abuse of economic dependence, fining Hera SpA, a company active in the sector of gas distribution, €800,000. Hera’s abuse consisted of systematically delaying the payments due to its suppliers of gas meters, which were found to be in a weaker position because of their smaller size compared to Hera’s significant presence in the gas distribution market.
ii Trends, developments and strategies
The TAR Lazio clarifies the scope of Article 8(2)-quater of the Italian Competition Act on legal monopolies and services of general economic interest
On 28 September 2016, the TAR Lazio28 confirmed that Poste Italiane SpA had infringed Article 8(2) quater of Law No. 287/90, thereby applying this provision for the first time.
Pursuant to Article 8(2) quater of Law No. 287/90, any undertaking with a legal monopoly or required by law to provide a service of general economic interest (SGEI), offering to its subsidiaries goods and services exclusively available to it in connection with its public service mission, must also provide the same goods and services under equivalent conditions to other undertakings that compete with its subsidiaries.
Poste Italiane runs the universal postal service in Italy and grants its subsidiary Poste Mobile access to its network of post offices to promote its telecommunications services. The ICA held that Poste Italiane infringed Article 8(2) quater by refusing access to its network of postal offices to H3G SpA, a competitor of Poste Mobile.29
Confirming the ICA’s decision, the TAR Lazio clarified that the provision in Article 8(2) quater, unlike the prohibition of abuse of dominance, applies irrespective of the market position of the involved undertakings (e.g., in terms of turnover and market shares). The profitability of the SGEI is also irrelevant, given that Article 8(2) quater makes no reference to economic factors.
The TAR Lazio also clarified the concept of goods or services ‘exclusively available’ in connection with public service obligations, provided for in Article 8(2) quater. It clarified that the concept encompasses goods awarded under a concession regime and goods which, although exclusively available to an undertaking entrusted with a SGEI, are not exclusively used for SGEI purposes. Instead, the provision does not concern essential facilities, because it does not contain any reference to the duplicability and substitutability of the goods or services in question.
After its decision against Aspen (see above), the ICA will likely continue to focus its attention on cases of alleged excessive pricing. In particular, last year the ICA initiated two investigations, against Enel SpA and Sorgenia SpA, concerning the prices charged in the market for dispatching services (e.g., technical restrictions).30
Other ongoing investigations concern an alleged exclusionary abuse (‘margin squeeze’) by Poste Italiane SpA against its competitors in the market of mail delivery services31 and Onorato Armatori SpA’s alleged discriminatory treatment of customers in the market of sea shipments between Sardinia and the rest of the country.32
IV SECTORAL COMPETITION: MARKET INVESTIGATIONS AND REGULATED INDUSTRIES
i Significant cases
In 2016, the ICA continued to focus its enforcement activity on bidding markets for the provision of public services or other public tenders.33 The prioritisation of these dossiers reflects the ICA’s intention to tackle anticompetitive practices resulting in serious harm to public finances, although certain aspects concerning the application of the ICA’s fining guidelines in those cases remain controversial.34
The ICA zeroed in on the banking sector, initiating investigations and follow-on proceedings concerning electronic payments.35 The electricity market was also subject to close scrutiny.36 Regarding the telecommunications industry, an important decision of the TAR Lazio confirmed that the investigation and regulatory activity entrusted to the Italian Telecommunications Authority are without prejudice to the ICA’s competition enforcement powers in this sector.37
Finally, in 2016 the ICA closed its sector inquiries into urban waste management, dairy products, human vaccines, local public transports and the audiovisual market.38
ii Trends, developments and strategies
Within 60 days of receipt of the ICA’s annual report, the Italian government is required to table a bill aimed at developing and supporting competition and protecting consumers (see Article 47 of Law 99/2009). In June 2015, the President of the ICA addressed the Committee of the Chamber of Deputies discussing the government’s bill.39 The President highlighted the main obstacles to effective competition still affecting different key sectors of the Italian economy, and put forward detailed proposals to address them.
In particular, the President acknowledged that the proposed bill would effectively enhance transparency and consumer awareness in the banking sector, by requiring service providers to publish prices offered for the most common financial services on a comparison website. With respect to telecommunication services, the bill would facilitate consumer mobility among different mobile service providers. The President also welcomed the abolition of regulated tariffs in the retail supply of gas and electricity. However, the President noted that additional measures should be adopted to ensure effective competition among professionals, in particular lawyers and notaries. Finally, the President noted that certain activities in the postal sector (such as the notification of judicial documents) will continue to be exclusively entrusted to the former monopolist Poste Italiane SpA until at least 2017, even though they should be profitably opened up to competition.
The bill proposed by the Italian government was approved by the Chamber of the Deputies in October 2015, but is still under discussion in the Senate. The upper house is further amending the bill to include a legal basis allowing the government to regulate transportation network companies, such as Uber. The amended bill will therefore need to be newly approved by the Chamber of the Deputies before becoming law. Due to the persisting uncertainties on the stability of the Italian government and legislature, the final approval of the bill is not expected anytime soon.
V STATE AID
The legal framework concerning state aid is set at the EU level and enforced by the European Commission.
i Significant cases
On 28 April 2016, the Commission approved Italy’s transitory scheme for financing renewable energy technologies, except for solar photovoltaic technology, between 2015 and 2016.40 Under the scheme, green electricity producers will benefit from feed-in tariffs or a variable premium on top of the electricity market price, depending on their plant power. The Commission concluded that the measure was in line with its Guidelines on State aid for environment protection and energy 2014–2020,41 inasmuch as it helped Italy to achieve the long-term climate change and energy sustainability targets set forth in the European Union energy policy.
On 30 June 2016, the Commission also approved Italy’s ultra-broadband plan for 2016–2022.42 The measure, which aims at developing a state-owned infrastructure for high-speed data transfer, was found to be in line with the EU Digital Single Market agenda and the Commission’s Guidelines for the application of State aid rules in relation to the rapid deployment of broadband networks.43 In particular, the aid will be granted by way of open tenders and limited to areas where no private investment has been made or planned, while the new infrastructure will be accessible to all operators on an equal footing.
On 10 June 2016, the Commission opposed a measure adopted by the Italian authorities to compensate Arfea – Aziende Riunite Filovie ed Autolinee for the provision of passenger transport services by bus in Piedmont.44 The Commission found that the measure constituted state aid because it did not meet the conditions set forth by the case law to be qualified as compensation for public service obligations.45 In particular, it was unclear whether Arfea had been entrusted with a public service obligation, the parameters for the calculation of the compensation had not been set in advance, and Arfea made an unreasonably high profit for the provision of its services. The Commission then concluded that the aid was not compatible with the internal market because it did not comply with the applicable requirements provided for in Regulation (EC) No. 1370/2007,46 particularly with respect to the mandatory contents of the service contracts and the calculation of the compensation amount. The Italian authorities were therefore ordered to recover the aid granted to Arfea.
Two noteworthy state aid decisions concerning Italy are expected to be published soon by the Commission: the approval of the public support granted for the restructuring of the third largest Italian bank, Banca Monte dei Paschi di Siena SpA,47 and the order to recover an incompatible aid granted to airlines active on the air routes to and from Sardinia.48
VI MERGER REVIEW
i Significant cases
In 2016, the ICA made merger clearance conditional upon remedies in three cases.
With respect to the acquisition by A2A SpA of Linea Group Holding SpA, the ICA found that the transaction would have strengthened A2A’s dominant position in the market for urban waste processing in Lombardy. The ICA also noted that the resulting entity would have had an incentive to leverage its dominance in the upstream market of waste collection. The transaction was cleared upon the parties’ commitment to divest a waste processing plant in Lombardy and to make capacity in other plants available to third parties under favourable economic terms.
The ICA also raised concerns on the acquisition of RCS Libri SpA by Arnoldo Mondadori Editore SpA, two major competitors in the Italian book publishing sector with consolidated presence at different levels of the value chain. The ICA noted that the transaction would result in the creation or strengthening of a dominant position in some of the affected markets. This would have enabled the resulting entity to impose more stringent commercial conditions to independent bookstores and to reserve a wider share of shelf space for its own products. To secure clearance, the parties committed – among others – to divest two controlled brands (Bompiani and Marsilio), reserve shelf space in Mondadori stores for competitors, and provide access to their e-book catalogue to any interested reseller.
Regarding the acquisition of Gruppo Finelco SpA by RTI – Reti Televisive Italiane SpA – respectively active in the radio and television industries – the ICA found that the transaction would create the strongest player in the radio advertisement market. The resulting entity would be able to cover an unparalleled range of users of both genders and across all ages. Moreover, the resulting entity could bundle its advertising services on Finelco’s radio stations and RTI’s TV channels, therefore foreclosing competitors in those segments. To address the ICA’s concerns, the parties committed not to renew their contracts for the management of advertising spaces in two major radio stations (Radio Italia and Radio Kiss Kiss).
ii Trends, developments and strategies
The old EU law distinction between cooperative and concentrative joint ventures remains applicable under Italian competition rules. Accordingly, all joint ventures (including full-function ones) whose main object or effect is the coordination of their parent companies behaviour do not constitute a ‘concentration’ within the meaning of Article 5 of Law No. 287/1990. These joint ventures must be assessed under the restrictive agreements and/or market dominance provisions. The ICA presented a reform proposal to the Italian government through Recommendation No. AS988 of 2 October 2012, suggesting to add into Article 5 an explicit reference to the applicability of merger control rules also to full-function cooperative joint ventures. However, the proposal has not yet become law.
Pursuant to Article 16(1) of Law No. 287/1990, concentrations not falling under the EU jurisdiction must be reported to the ICA if the following turnover tests were met in the preceding fiscal year: (1) the aggregate Italian turnover of all undertakings concerned exceeded €495 million, and (2) the Italian turnover of the target undertaking exceeded €50 million.49 Since 1 January 2013, these thresholds are cumulative and no longer alternative. This amendment led to a drop in the number of notified concentrations from 459 in 2012 to 80 in 2013, 45 in 2014, 51 in 2015, and 52 in 2016.
In 2014, the ICA proposed revising the notification thresholds and launched a public consultation, because a number of important concentrations escaped the ICA’s review as they did not exceed the target undertaking threshold. However, absent Parliament intervention to revise the applicable thresholds, the ICA’s merger control activity remains severely limited.
The ICA has continued to pursue its approach in terms of both advocacy and enforcement, in particular in regulated sectors. In light of the new fining guidelines, fine amounts have increased. Merger control is the area in which amendments continue to be most desirable, both in terms of filing thresholds (which are now excessively high) and substantive test analysis (moving away from the dominance test to the significant impediment to effective competition test). Moreover, in line with EU rules, efficiency should formally become part of the ICA’s assessment.
1 Giuseppe Scassellati-Sforzolini and Marco D’Ostuni are partners, Luciana Bellia is a senior attorney and Fabio Chiovini is an associate at Cleary Gottlieb Steen & Hamilton LLP.
2 ICA decisions may be appealed before the Regional Administrative Court for Lazio (TAR Lazio), whose judgments are in turn subject to appeal before the Council of State.
3 A table summarising the ICA’s activities from 2011 to 2016 is available at www.agcm.it/component/joomdoc/come-funziona/e27_file.pdf/download.html.
4 Based on Article 101 TFEU, the ICA adopted the decisions of 24 February 2016, case I777 – Tassi sui mutui nelle province di Bolzano e Trento; 19 April 2016, case I790 – Vendita diritti televisivi Serie A 2015-2018; 8 June 2016, case I783 – Accordo tra operatori del settore vending; 26 October 2016, case I789 – Agenzie di modelle; 21 December 2016, case 792 – Gare ossigenoterapia e ventiloterapia. Based on Article 2 of Law No. 287/90 (i.e., the national law provision mirroring Article 101 TFEU), the ICA adopted a decision of 15 December 2016, case I710 – Usi in materiali di mediazione immobiliare.
5 ICA’s decision of 23 March 2016, case I779 – Mercato dei servizi turistici – Prenotazioni alberghiere online.
6 ICA’s decision of 29 September 2016, case A480 – Incremento prezzo farmaci Aspen (based on Article 102 TFEU).
7 ICA’s decisions of 3 February 2016, case A482 – E-Class/Borsa Italiana and 6 September 2016, case A486 – Enel distribuzione – Rimozione coatta dispositivi smart metering. The ICA also published, but has not yet approved, commitments offered by the parties in cases A489 – Nuovo Imaie – Condotte anticoncorrenziali and A495 – Gara TPL Padova.
8 The interim order requires APS Holding SpA to provide the local transport authority with all of the information required to finalise as soon as possible a bidding procedure for the award of a new contract for local transport services. See ICA’s decision of 20 July 2016, case A495 – Gara TPL Padova.
9 ICA’s decisions of 23 March 2016, case C12023 – Arnoldo Mondadori Editore/RCS Libri; 13 April 2016, case C12017 – Reti Televisive Italiane/Gruppo Finelco; and 27 July 2016, case C12044 – A2A/Linea Group Holding.
10 ICA’s decision of 8 June 2016, case I783 – Accordo tra operatori del settore vending.
11 ICA’s decision of 26 October 2016, case I789 – Agenzie di modelle.
12 French Competition Authority’s decision of 29 September 2016, case 16-D-20 – Mannequinat.
13 UK Competition and Markets Authority’s decision of 16 December 2016, case CE/9859-14 – Conduct in the modelling sector.
14 Council of State’s judgment No. 167 on 19 January 2016, FNOMCEO v. ICA.
15 TAR Lazio’s judgments No. 6470, 6471, 6474, 6475, 6476, 6477, 6478, 6483, 6484, 6486 and 6503 on 6 June 2016, Studio Immagine et al v. ICA.
16 TAR Lazio’s judgment No. 6921 on 16 June 2016, Unicredit et al. v. ICA.
17 Council of State’s judgment No. 362 on 29 January 2016, Hapag-Lloyd v. ICA.
18 European Court of Human Rights’ judgment No. 43509 on 27 September 2011, Menarini v. Italy.
19 Council of State’s judgments Nos. 3769, 3770, 3771, 3772, 3773 on 31 August 2016, ICA v. Snav S.p.A. et al.
20 TAR Lazio’s judgment No. 11169 on 19 October 2016, Consiglio nazionale forense v. ICA.
21 Cases I742 – Tondini per cemento armato and I793 – Aumento prezzi cemento.
22 ICA’s decision of 7 December 2016, case I802 – RC Auto.
23 ICA’s decision of 19 April 2016, case I790 – Vendita diritti televisivi serie A 2015-2018.
24 TAR Lazio’s judgments Nos. 12811, 12812, 12814 and 12816 of 23 December 2016, Lega Calcio et al. v ICA.
25 ICA’s decision of 23 March 2016, case I779 – Mercato dei servizi turistici – Prenotazioni alberghiere.
26 ICA’s decision of 29 September 2016, case A480 – Incremento prezzo farmaci Aspen.
27 Spanish Competition Authority, La CNMC incoa expediente sancionador contra el grupo Aspen y su distribuidor en España Deco Pharma por posibles prácticas abusivas, available at www.cnmc.es/2017-02-03-la-
28 TAR Lazio’s judgment No. 9965 on 28 September 2016, Poste Italiane v. ICA.
29 ICA’s decision of 12 December 2015, case SP157 – H3G/Condotte Poste Italiane and Postemobile.
30 ICA’s decisions initiating proceedings on 29 September 2016, cases A498A – Enel – Prezzi servizi di dispacciamento area Brindisi and A498B – Sorgenia – Prezzi servizi di dispacciamento area Brindisi.
31 ICA’s decision initiating proceedings on 1 June 2016, case A493 – Poste Italiane/Prezzi recapito.
32 ICA’s decision initiating proceedings on 6 April 2016, case A487 – Compagnia italiana di navigazione – Trasporto marittimo delle merci da/per la Sardegna.
33 The ICA initiated proceedings with its decision of 15 March 2016, case I796 – Servizi di supporto e assistenza tecnica alla PA nei programme cofinanziati dall’UE. The ICA adopted final decisions on 22 December 2015, case I785 – Gara CONSIP servizi di pulizia nelle scuole and 21 December 2016, case I792 – Gare ossigenoterapia e ventiloterapia.
34 In its decision of 21 December 2016, case I792 – Gare ossigenoterapia e ventiloterapia, the ICA applied a particular method of setting fines in the case of infringements affecting bidding markets, as provided for in the guidelines issued by the ICA in 2014. According to this method, for the purposes of determining the basic amount of the fine, the amount of sales affected by the infringement is presumed to be equal to the amount awarded during the tender procedure or, if no bid has been accepted, to the auction’s starting price. This criterion has been criticised as inaccurate and unfair, because the amounts taken into consideration in tender procedures may actually be maximum levels, which do not reflect the real value of the good offered, or services rendered, by the bidder(s).
The ICA also imposed fines overall exceeding the statutory limit of 10 per cent of the undertakings’ annual revenues. This was possible because the ICA considered that each individual tender procedure had been affected by a distinct infringement, therefore multiplying the fines imposed to each involved undertaking.
35 ICA’s decisions initiating proceedings on 21 January 2016, case I794 – ABI/SEDA and 6 July 2016, cases I724C – Commissione interbancaria Pagobancomat and I773C – Consorzio Bancomat – Commissioni Bill Payments.
36 ICA’s final decision of 6 September 2016, case A486 – Enel distribiuzione – Rimozione coatta dispositive smart metering. ICA’s decisions initiating proceedings on 29 September 2016, cases A498A – Enel – Prezzi servizi di dispacciamento area Brindisi and A498B – Sorgenia – Prezzi servizi di dispacciamento area Brindisi.
37 TAR Lazio’s judgments No. 9553, 9554, 9555, 9556, 9559, 9560 and 9561 on 20 July 2016, Sielte S.p.A. et al. v. ICA.
38 ICA’s decisions of 21 January 2016, inquiry IC49 – Mercato della gestione dei rifiuti solidi urbani; 2 March 2016, inquiry IC51 – Indagine conoscitiva sul settore lattiero caseario; 11 May 2016, inquiry IC50 – Mercati dei vaccini per uso umano; 1 June 2016, inquiry IC47 – Condizioni concorrenziali nei mercati del trasporto pubblico locale; and 30 November 2016, inquiry IC41 – Indagine conoscitiva sul settore audiovisivo.
39 The text of the speech given by the President of the ICA is available at www.agcm.it/index.php?option=
40 Commission’s decision of 28 April 2016, case SA.43756 (2015/N) Italy – Support to electricity from renewable sources in Italy.
41 Commission’s communication, Guidelines on State aid for environmental protection and energy 2014–2020, OJ C 200, 28.6.2014, pp. 1–55.
42 Commission’s decision of 30 June 2016, case SA.41647 (2016/N) Italy – Strategia banda ultralarga.
43 Commission’s communication, Guidelines for the application of State aid rules in relation to the rapid deployment of broadband networks, OJ C 25, 26.1.2013, pp. 1–26.
44 Commission’s decision of 10 June 2016, case SA.38132 (2014/NN) Italy – Additional PSO compensation for Arfea.
45 Court of Justice’s judgment on 24 July 2003, C-280/00 Altmark.
46 Article 9, Regulation (EC) No. 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos. 1191/69 and 1107/70, OJ L 31, 3.12.2007, pp. 1–13.
47 Commission’s decision of 29 December 2016, case SA.47081 (2016/N) Italy – Request for liquidity support by BMPS.
48 Commission’s decision of 29 July 2016, case SA.33983 (2016/NN) Italy – Aid to certain airlines in Sardinia granted under the scheme established by Regional Law 10/2010.
49 The ICA annually amends the turnover thresholds based on the gross national product price deflator index.